It’s a difficult situation to be in, but one we see a lot of the time. The dilema between renting and buying. According to a recent survey by Halifax, 372,000 First Time Buyers made their step onto the character ladder last year. This equates to half of all house purchases with a mortgage. This is the first time since 1995 that First Time Buyers have accounted for such a large proportion of the market, showing the strength of the first time buyer market.
Getting on the character ladder
Often, home movers are in two minds whether to make the jump (e.g. “I like my neighbours, but I’d like an additional bedroom”). This is the opposite to most possible First Time Buyers who, if you ask them, aim to get on the character ladder one day. There’s a real determination with them.
As a consequence of this excursion to be homeowners, they are often undeterred by external factors such as current political events. Whilst the housing market does suffer peaks and troughs, this hardly ever stops people who want to get onto the character ladder.
Buying a character should always be classed as a long-term investment. And whilst it might not be ideal if your home drops in value, history indicates that when that does occur the prices go back up in the long run.
So buying is always better than renting then?
Well, no, not necessarily. Mortgages aren’t always the right answer. It might come as a surprise, but we regularly encourage young people to rent when they first move out of home, especially if they are a associate. This is so that they can determine what kind of character they want and if they can live together. The downside is that whilst you’re paying rent, it’s harder to save for a place, slightly of a catch-22 situation.
It’s also worth noting that getting out of a mortgage can be difficult and sometimes expensive. consequently, you have to be sure that things are going to work out OK before you commit to one.
Small place mortgages
95% mortgages are more freely obtainable now than they used to be. If you’re more than halfway to having the 5% place saved up, then it’s worth trying to get an Agreement in rule in place. This will help you check that you will be eligible for a mortgage when the time comes.